Insolvencies among German businesses were up by almost 25% this year, credit bureau Creditreform said on Monday, as firms are grappling with rising energy prices, the ailing economy and the fallout from the coronavirus pandemic.
With no signs of improvement, the number of insolvencies is expected to rise to record levels in 2025, the credit bureau said.
"The surge is turning into a wave, and this will continue in 2025," Creditreform managing director Bernd Bütow said.
The credit bureau expects a total of 22,400 companies to declare insolvency by the end of 2024, up from 17,814 cases the year before.
It would be the highest level since 2015, with 23,100 insolvencies.
"The crises of recent years are now hitting companies with a certain time lag in the form of insolvencies," said Patrik-Ludwig Hantzsch, head of economic research at Creditreform.
"This means that insolvency figures could soon be on a par with the record levels of 2009 and 2010, when over 32,000 companies went bankrupt."
Creditreform believes the "very dynamic insolvency trend" will continue at least in the first quarter of 2025, according to Hantzsch.
He also cited the reluctance of many companies to invest amid a very uncertain business climate, leading to a further exacerbation of the situation.
German credit insurer Allianz Trade also expects a further increase in corporate bankruptcies in Germany in 2025. "The ongoing weak economic situation in Europe, particularly in Germany, is causing problems for local companies," Milo Bogaerts, chief executive of Allianz Trade in Germany, Austria and Switzerland, said in mid-October.
Smaller-sized businesses particularly affected
A number of major German firms – including retail chain Galeria Karstadt Kaufhof, tour operator FTI Touristik and fashion brand Esprit Europe – filed for insolvency this year.
However, most firms affected were businesses with 10 employees or fewer, making up 81.4% across all sectors, according to Creditreform.
A total of 320,000 jobs are at risk or have been cut due to corporate insolvencies in 2024, the credit bureau said.
The number of insolvencies was particularly high in the service sector, including in gastronomy, as well as in retail and the construction industry.
Creditors' losses totalled an estimated €56 billion ($58.7 billion), well above the previous year's level of €31.2 billion.
Steffen Müller from the Leibniz Institute for Economic Research Halle, who reported a surge of insolvencies in October, said the development was the result of "a perfect storm of prolonged economic weakness and drastically increased costs."
- Insolvencies
- Germany
Source: www.dailyfinland.fi
